Financial Statements - What is financial statement | Balance sheet | Profit and Loss account | Cash and Fund flow statements

Financial Statements

Hello Friends,

Today we will know about "Financial Statements". So, after reading this article you will know about these questions-

• What is Financial Statements?
• Objectives of Financial Statements.
• Types of Financial Statements?
• What is Balance Sheet?
• What is Profit & Loss Account?
• What is Trading Account?
• What is Fund Flow Statement?
• What is Cash Flow Statement?

Financial Statements - These are usually prepared at the end of the year. These mainly contain the accounting of the business operations. That is, there is information related to the cash flow, profit etc. of the business.

Financial statements have their own importance in any business. So through this article we will provide you some important information about the financial statement which will be important.

In this, information is provided about the financial performance of the company, besides information about its position in the market is given. A financial statement usually includes a company's balance sheet, a statement of cash flows, and a statement of profit and loss, a statement of its financial position.

This detail is mainly verified by a few people in the company. Financial statements are also used by lenders to get an idea of ​​the financial position of a company. Through this he decides whether to give credit to such a business company or not. Financial statements are used by investors to decide whether investing in a company would be beneficial or not.

When there is talk of merger of one company with another company or sale and purchase of a company. Or talk of Marjar or Amalgamasan. So the seller uses the financial statements to estimate the price that should be presented to investors, and the buyer decides through this how much it would be appropriate to deal.

Any tax is based on its assets and income and thus a company income statement is a must for the company. Financial statements are a way for a company to communicate with investors and stakeholders. It is necessary to have knowledge of such facts through the statement. Because it shows the financial position of the company and it also affects the prices of the shares.

In this the following are included.

 Trading account

 Profit and loss account

 Balance sheet

According to Howard and Upton

 "Although such a formal statement expressed in currency values ​​may be known as financial statements, most accounting and professional writers use it only for position statements and profit and loss statements."

According to R.N. Anthony

 “Financial Statement” means the statement which gives the financial position of the business and the results of the business activities at the end of the accounting period.

Objectives of Financial Statement-

Some important people of the company like authority, partner or stakeholder need to know the financial position of the company and its financial condition. Therefore, financial statements are used to get a better understanding of the financial assets and liabilities of the company.

Financial statements help to understand a company's ability to grow profits and move forward by minimizing losses. Shareholders and investors use this account to make investment decisions. It is also used to understand the inner workings of the company.

It shows the efficiency of the management of the company. This shows how the company is performing to generate profits and grow. And how much and what is needed in this now. The financial statement is also used to give an idea of ​​the accounting policy used by the company. Whether it is accurate or not whether the estimates made are in effect or not.

Investors can also use financial statements to obtain information on a company's cash flows. This data can be used primarily by investors and creditors as a reference for a company's liquidity and cash requirements. Preparation of financial statements is a statutory requirement in some organizations like companies, companies etc. Therefore, financial statements are also prepared to meet these statutory requirements.

There are also some institutions that show the fulfillment of the social responsibility of the organization. It is necessary to prepare the details for them.

Types of Financial Statements-

• Balance Sheet
• Profit and Loss Account of Income Statement
• Fund Flow Statement
• Cash Flow Statement

Balance Sheet –

This statement is showing the assets and liabilities of a company/firm/organization or an institute as on a given date and is known as balance sheet or position statement of the company. It can be prepared only after that. In which the balance of the accounts of all the debtors and creditors of the business's capital, debt, property and property etc., hence it is called a brief economic statement of business. A position statement is a picture of the financials of a running business at a given point in time.

Profit and Loss Account of Income Statement –

Profit and Loss (P&L) is a financial statement that summarizes the revenues, costs and expenses incurred during a specified period, usually a financial quarter or year. P&L statement is synonymous with income statement.

Fund Flow Statement-

It shows the sources of funds and applications etc. on a particular date. The statement of change in working capital is prepared before the preparation of fund flow statement. It is presented to find out the change in financial position between two accounting periods.

Cash Flow Statement-

It summarizes the current financial position of the company. And it shows the change in the cash balance of the company.